Bitcoin Price Plunge to a Multi-Month Low: Is Mt. Gox to Blame?

Bitcoin’s plunge to a multi-month low, spurred by Mt Gox’s $2.71 billion sell-off, ignites market volatility and analyst debate on recovery prospects.
Crypto, Voice Of Crypto

Key Insights

  • Bitcoin's price dropped massively this week, reaching its lowest point since February.

  • This decline may have been due to a large sell-off of $2.71 billion worth of Bitcoin from Mt Gox.

  • This sell-off triggered liquidations worth more than $600 million across the crypto market, with Bitcoin accounting for more than $200 million.

  • Analysts are divided on the future impact of Mt Gox's Bitcoin sales. Some fear further sell-offs, while others believe the market will recover.

  • Investors can expect volatility in the crypto market in the near future.

Bitcoin has taken a beating this week, especially with its plunge much further down than the $60,000 zone towards the $55,000 zone.

Between Thursday, July 4, and Friday, July 5, the flagship cryptocurrency plummeted to the $53,500 zone on Coinbase, the lowest since February of this year.

This sharp decline triggered more than $600 million worth of liquidations across the board, kicking traders off the market and leaving Bitcoin alone to account for as much as $225 million in liquidations.

The crypto market’s liquidations

The crypto market’s liquidations

But what could have caused this liquidation wave? Why is Bitcoin crashing down so hard, and is an end in sight?

The Sell-Off That Caused It All

It turns out that Bitcoin's crash might have been caused by a flood of nearly $3 billion worth of tokens hitting the market from Mt Gox's wallets.

According to reports from Arkham Intelligence, Mt Gox, the infamous crypto exchange that crashed in 2014, made headlines again this week after transferring a staggering 47,229 BTC (all of which is worth $2.71 billion) from its cold storage wallet to an unknown wallet address at 12:30 a.m. UTC on July 5.

This liquidity flood hit the market hard, causing Bitcoin and the rest of the cryptocurrencies on the market to plummet in a matter of hours.

To put the crypto market’s position into perspective, this makes the current liquidation figure the highest the market has seen in the last two months.

This $2.71 billion Bitcoin sale from Mt Gox now means that the defunct exchange has around $8.5 billion (nearly thrice the previous amount) worth of Bitcoin left to pay back to its creditors.

Market Concerns and Analyst Perspectives

Will the market sell-off continue? So far, commentators are divided over the impact of Mt Gox's Bitcoin market flooding.

Some commentators continue to worry that this spike in Bitcoin's circulating supply will trigger a market sell-off, considering how the Mt Gox Bitcoin has remained untouched for nearly a decade.

However, other analysts seem optimistic and believe that the market might be even more resilient than it suggests.

A good example is Galaxy Digital’s head of research, Alex Thorn, who explained in a recent thread that Mt Gox creditors might be even more "diamond-handed" than anticipated.

I continue to believe the Gox coins will be more hodl'd than sodl'd," Thorn tweeted. "Even if I'm right that these coins are not going to be dumped en masse by creditors, the fear is palpable, particularly with the Germans also dumping on us. We'll get through this overhang and never have to talk about it again."

Overall, investors can expect great volatility in the cryptocurrency from here going forward.

However, if analysts like Thorn are right, Bitcoin will recover soon from here, and nobody will remember the “crash to $50k” a few months from now.

Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information but will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.

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